Applying a new lens to carbon emissions benchmarking

A recently released Deloitte Access Economics report, supported by Origin Energy, applies a new lens to help understand the economic drivers of emissions and better reflect the relationship between emissions and economic activities.

Deloitte Access Economics Director Kumar Padisetti explained, “Simplistic measures commonly used to scale countries’ emissions for comparisons - such as population (CO₂-e/capita) - have a very limited connection to what really drives emissions in each economy, which is productive activity, because population growth is not always related to economic growth. CO₂-e/GDP provides comparisons which are more connected to economic activity.

“We have looked at how we can identify the relationship between the structure of economies and emissions, and have conducted analysis that accounts for GDP, population, urbanisation, weather and choice of energy fuel.”

The company’s analysis compares CO₂-e/GDP (carbon intensity, broken down into key drivers of energy intensity - energy/GDP) and the carbon intensity of energy (CO₂-e/energy) across G20 nations. The G20 represents 66% of the global population, 85% of global GDP and 76% of global carbon emissions, and also include the top five carbon emitters (China, US, India, Russia and Japan) and the large emerging and growing economies of China, Russia, India and Brazil.

Australia’s total equivalent carbon emissions per million dollars of GDP are below the average of the G20 countries and similar to Canada. This differs markedly from per capita emissions, in which Australia is often shown to be the worst-performing country in the G20.

Padisetti said: “Ideally, countries should seek to reduce emissions while maintaining economic growth, by reducing the emissions intensity of their economies. But without the collective action and agreement of the G20 countries, and in particular the top five emitters, it will be difficult to achieve the necessary reductions in global emissions to avoid dangerous climate change.

“Benchmarking across countries in a consistent and meaningful way is important if we are to develop the right, targeted national and global policy responses to reduce emissions.”

According to the analysis:

• In recent years, Australia’s carbon emission productivity has been improving in both absolute terms and relative to the average of the G20. From 2009 to 2010, Australia’s emissions per unit of GDP fell 4.4% and a further 3.1% from 2010 to 2011.
• Australia’s energy intensity is in the lowest quartile of the G20 countries and on par with developed economies such as Canada and the US.

Deloitte Access Economics Director Dr Ric Simes said: “Simple, easy-to-understand metrics such as CO₂-e/capita do not fully capture the drivers of underlying emissions within an economy.

“Our analysis attempts to explain some of the drivers of emissions performance in the context of economic growth targets, the need for consistent policy approaches between economic growth and carbon emissions reduction targets, and delinking carbon emissions from energy production (and GDP growth) to drive the development of economically viable low-emissions or zero-emissions technology.”

The report can be downloaded here.